Sinckler pours cold water on FX proposals

The recent recommendations put forward by the Foreign Exchange Working Group of the Social Partnership to raise cruise and airport taxes seem likely to be dead on arrival on the desk Minister of Finance Chris Sinckler.

Speaking to the media Wednesday during a visit to the three primary schools in his St Michael North West constituency ahead of next weeks Common Entrance exams, Sinckler seemed less than impressed with some of the committee’s recommendations, which included a hike in the cruise visitor head tax and airport departure fees.

In addition, the committee recommended a full examination of the national import bill “with a view to identifying a list of non-essential items which would be subjected to higher tax rates and or quantifiable limits” and the lowering of the Value Added Tax to below 15 per cent, with no exemptions, concessions or zero ratings for any sector.

The working group was mandated by Prime Minister Freundel Stuart last month to advise on a series of measures to be taken to shore up the dwindling foreign exchange reserves which fell precariously from $1.4 billion in 2012 to $681 million by the end of last year.

Concerned that the bread and butter tourism industry was not producing the required financial returns while the island’s stock of foreign reserves was fast declining, the Committee warned of the need for urgent corrective action to stem the downward trend.

“This requires a simultaneous parallel approach where incentives that earn foreign exchange are adopted, while at the same time measures to save foreign exchange are implemented,” the group said in its report to Stuart, while warning of the need for “some radical impactful measures”.

However, zeroing in on the proposal to increase airport departure taxes, Sinckler said he failed to see how it would bolster the foreign exchange reserves.

“If that is one of the recommendations – I can’t confirm if it was because I am not at liberty to speak to what is in the report – but even if that is the case, how would raising airport departure tax or whatever taxes they are recommending help the foreign exchange?

“I am not quite sure because taxes are collected in Barbados dollars at the airport. There may be one or two visitors who pass through who may not have Barbados currency and may pay in a foreign currency but that is few and far between. So I don’t see how that would affect the foreign exchange position of the country,” Sinckler argued.

The Minister of Finance also gave early notice that there was no guarantee of a wholesale acceptance of the recommendations. Instead he revealed that his intention was to assess the applicability and merit of each proposal.

“It is a matter of determining what in the circumstances is applicable, what makes sense, what can work and what cannot work. That is how you analyze stuff. People propose things – sometimes the people who propose may not be fully seized of the information – but for whatever the proposals made are worth, I am sure the Prime Minister thanks the Social Partnership for the excellent work that they did and then we take each proposal as they come and see what can be done with each of them,” Sinckler assured.

Earlier this week, economist Jeremy Stephen dismissed the recommendations as “piecemeal”.  Making specific reference to the proposed rise in airport departure taxes, Stephen said some of these recommendations would do little improve the foreign exchange reserve “

“Unless the whole purpose behind raising the airport taxes was more along the case of retaining taxes, being able to grow tax revenue, I as an economist cannot fully support the rationale of that leading to foreign exchange retention as such, given the fact that most departure taxes are paid in local currency to begin with,” Stephen told Barbados TODAY.

colvillemounsey@barbadostoday.bb

29 Responses to Sinckler pours cold water on FX proposals

  1. Samantha Best April 27, 2017 at 5:11 am

    Please tell us who are/were the members of the group. Everything is always a secret in Barbados. They are/were supposed to be working on our behalf.

    Did they have the requisite knowledge and experience in dealing with such matters? Hope they were not strictly academics because that’s all we are working with these days and they have the country in a mess

    Reply
  2. Carson C. Cadogan April 27, 2017 at 7:10 am

    Tourism is the main stay of Barbados. Unfortunately Barbados has a one economy. It makes absolutely no sense increasing departure tax. Far from increasing departure tax , departure tax in Barbados ought to be reduce by 50%. Tourism is the only industry firing on all cylinders here in Barbados. As a result we need to make Barbados an easier place to visit and to depart from.

    Increasing the departure tax will have the devastating impact of sending Tourists to other destinations.

    This is a stupid recommendation and it will prove fatal for Barbados. We are looking to kill the goose which is laying the golden egg.

    Cruise visitors must not face increase taxes either.

    Reply
  3. Carson C. Cadogan April 27, 2017 at 7:23 am

    One would notice that the Barbados Labour Party and their operatives are talking foreign exchange for import cover.

    They are unwittingly showing the solution to the problem right there. Not that it is their intention.

    A reduction in imports will save valuable foreign exchange. Ban the importation of all vehicles for a period of three years. The exception would be vehicles for use in the Tourism sector, public transport, Ambulances and for Govt. purposes. A reduction in taxes and duties on vehicle spare parts for three years. A restriction in the importation of consumer durables for two years such stoves, fridges, microwaves, washing machines, and such like with the exception of the Tourism sector and a reduction in taxes and duties on their spare parts for the corresponding period.

    Restrict the importation of electronic goods for a two year period.

    Reply
    • Leroy April 27, 2017 at 9:44 am

      Gov has to cut spending across the board fullstop!!!!!

      Gov must immediately Stop borrowing $ whether local or foreign.

      Instead of banning businesses from importing an item for 3 years and risk shutting down the economy, you need to adjust import duties on items by its importance/need. For example,,taxes on luxury cars can be raised aggressively(I bet anyone who can afford $200,000 on a car can afford to pay $400,000 for said car), taxes on sugar imports should be raised(we already produce sugar), taxes on junk foods should
      be raised, every single import should be categorized and duties assessed up or down accordingly.

      Reduce vat to 12.5% across the board NO EXEMPTIONS except some areas of medicine.
      2.5% levy on imports for sanitation.
      Take 10% revenue of road tax to pay transport board services,,
      A fuel tax of 2% for transport.

      There are 1 millions things this gov can do to fix the problems but people in power are scared,, like deers in the headlight and constantly checking the political winds.

      Reply
      • hcalndre April 27, 2017 at 10:45 am

        Leroy, there`s a tax on food items already and lots of people are turning to what you call junk food and now you are asking that more taxes should be put on junk foods so what is left for the bajans to eat now. Is all these taxes going to bring Barbados out of the economic hole, all it will do is to reduce the spending power of the people and some who have not had an increase in salary for the last 9 years.

        Reply
  4. Jea Alleyne April 27, 2017 at 7:23 am

    You hit the nail on the head Samantha…..In times of the Information Highway (Internet) where pro’s & con’s to most subjects are out there for any and everyone to analyse…..Still too much secrecy in Bim where it is more of a deficit to the country….If Government was to include their citizens, as they should, they would get more information and assistance in which to resolve their dilemma’s……how long is it going to take them to realise……The citizens are part and parcel of the process of Governance !!

    Reply
  5. Zeus April 27, 2017 at 7:28 am

    Perfect example of when you are off the board playing draughts you can see all the moves …the social partnership was critical of government about their inability to increase FX ….they were invited by the PM to bring proposals to the table and we now know what they brought ….next up is the BLP with the mother of all proposals ….I can’t wait for them to regain power

    Reply
  6. Peter April 27, 2017 at 7:28 am

    Carson C Cadogan. This is one time and perhaps the only time I shall agree with you and might I say Chris Sinckler. Trump has added a 2 % tax on all remittances leaving the USA. That will no doubt affect us here. Barbadians have to pay in excess of $US 200 for a visa to visit the USA. They are either rejected at the US Embassy here or are rejected at the point of entry. Money gone down the drain. No excuses. In Costa Rica and Dominican Republic, ALL persons travelling in without a national passport to gthose countries MUST pay a meager US$ 10.00 each. Plane loads od Americans and visitors from other countries must pay that inbound levy or fee. It can be paid with credit card so there is no excuse. They do not have to get a Barbados visa to get into Barbados. I think this is quite reasonable and can be applied. It’s one fixed $10.00 charge and not a percentage of their cost of travel. Persons who have traveled to those two destinations can attest to that.

    Reply
    • Richard Johnston April 27, 2017 at 8:07 am

      Peter, Barbados needs Americans a lot more than America needs Bajans. Increase Americans’ costs at your peril. Please document the 2% “tax” on remittances you allege.

      Reply
      • Peter April 27, 2017 at 8:32 am

        No we don’t Richard They will continue to come. They do it in many other countries. 10$.00 can hardly buy them a sandwich and a cup of coffee at the airport. It is only cheao misers like you will complain. Americans go on cruise ships and blow hundreds of dollars. We have no control over how much they charge us to get into their country and spend our money. Go to hell Richard.

        Reply
        • hcalndre April 27, 2017 at 6:54 pm

          Peter, our money as in Barbado$ dollars?

          Reply
    • hcalndre April 27, 2017 at 11:05 am

      Peter, this 2% tax on levy that Trump is adding on all remittances I know that it will affect Barbadians and although Barbados do not have as many people as Jamaica and I think Guyana they sends more money back. I want to remind bajans that only a few weeks ago, (miss knows it all) had a problem with the Guyanees sending money by Western Union and want the Barbados government to look into it, I question if she knows how much money bajans remit from the US. Canada and Europe and other countries. Now that the chickens have come home to roost, I want to hear her.

      Reply
  7. Tony Webster April 27, 2017 at 7:54 am

    F/X reserves / working balances are but one of our numerous national, structural issues. This working group…and that working group, this and that recommendation, are just that: well-meaning suggestions…un-ripe fruits. The very earth screams for action, implelmented like yesterday.

    The only real change, no matter which party is placed in power, will spring from General Elections. ASAP. We have not a not a moment to squander whilst Nero the Hero fiddles, connives, schemes, and seeks either divine intervention…connivance….or assistance of the best obeah-woman hereabaouts and nowabouts.
    I am far from being alone in this sentiment.
    Sentiment? I am blue vex that some eloquent, elevated, privileged Ossie Moore type, does not realise that taxpayers (voters) are only getting madder by each day the bell is remains un-rung!

    Each day the time of reckoning is postponed, makes it only the harder for some semblance of a recovery to be created.

    Does The Omnipotent One really have a conscience?

    Reply
  8. Milli Watt April 27, 2017 at 8:21 am

    “In addition, the committee recommended a full examination of the national import bill “with a view to identifying a list of non-essential items which would be subjected to higher tax rates and or quantifiable limits” and the lowering of the Value Added Tax to below 15 per cent, with no exemptions, concessions or zero ratings for any sector.” when you get a bunch a people who have been idol the majority of their lives this is what you get. No doubt the goods will be the ones they produce here at a higher cost and looking for protection now. waste of time MINISTER. Do what the people of this country gave you a mandate to do come up with a solution OR ELSE!!!! leave the nuthinarians to buy low and sell high

    Reply
    • Leroy April 27, 2017 at 9:51 am

      Too late for sinckler, he has already did what he thought would work,,so called austerity. What is wrong with increasing taxes on non essential items? Are luxury cars essential,,is brown sugar from guyana essential? Is coconut eater from guyana essential,,is corn curls from trinidad and jamaica essential, are all those sweet drinks essential,is brandy and johnny walker essential?

      Reply
      • hcalndre April 27, 2017 at 11:14 am

        Leroy, mention some of the essential foods and other things that you would recommend. Do politicians bring in their vehicles duty free? I`m just asking.

        Reply
        • Leroy April 28, 2017 at 12:35 am

          I can list you non essential that I would increase taxes on immediately
          1. Corn curls
          2. Candy and confectionery
          3. Alcohol
          4. Cigarettes
          Included are items which can be locally produced, taxes increased on those imports also.

          I would go through entire import category and revise taxes accordingly.
          I dont think politicians get that exemption anymore

          Reply
    • Leroy April 27, 2017 at 10:00 am

      Parliament should determine goods by necessity not a focus group or committee or private body, so your point is moot.

      ” No doubt the goods will be the ones they produce here at a higher cost and looking for protection now.”

      Reply
  9. Corey Broom April 27, 2017 at 9:49 am

    Governance

    Issues:
    1. PM and MoF not on the same page
    2. The MoF should have been in discussion with the working group so when recommendations were made you come to the public with a plan that you the MoF support and can sell to the public before enacting.
    3. This administration do not know that they do not know.

    Enough is enough… call elections now.

    Reply
  10. Leroy April 27, 2017 at 10:10 am

    Its hard to see this gov from pillar to post not knowing how to fix this economy, Fruendel dont know who to turn to next(IMF, Owen, Sinckler, Dr Estwick, Commitees, Call a friend, ask the audience??
    Maybe he should turn to the electorate for advice!!!!
    Ignorance at its best.

    Reply
    • hcalndre April 27, 2017 at 11:47 am

      Leroy, can you imagine the big word man can`t get nothing done right, and have not taken a ministry that`s call for real leadership and decision making, instead each time he gets a Committee, an FX group, A Tribunal and some I can`t recall and he just wait for the decisions which is a waste of time and money.

      Reply
  11. BaJan boy April 27, 2017 at 12:31 pm

    Sinkler and Fundel really making a mockery of our prople. They can’t agree on anything because of their silly little childish power games. Barbadians obviously cannot ever consider voting these clowns back in office.

    Reply
  12. Johnathan April 27, 2017 at 12:35 pm

    Sinkler get push out with his Owen Arthur proposal so he would never agree as he has to show that Fundel did the wrong thing in getting these so called business people who are just as clueless as he is…….

    Reply
  13. Zena April 27, 2017 at 12:44 pm

    Yes Leroy, Ignorance at it’s best

    Reply
  14. sticks and stones April 27, 2017 at 12:58 pm

    Too many emotionalism.The tourism industry has shown over the years that it is very resilient to negative change. Do not see how an increase in departure tax would bring the industry to a screehing halt

    Reply
  15. Carson C. Cadogan April 27, 2017 at 5:32 pm

    Let me confess. I am one of the persons who have no problem with the Down grades. I would like us to get more down grades.

    What the rating agencies are telling Barbados, Barbadians and residents of Barbados. Not only the Govt. is take note you are living far, far, far above your means.

    We over the years have tried to borrow our way to prosperity. But this comes at a huge price. Borrowing, borrowing, borrowing is what have us where we are today. When the Barbados Labour Party Govt. became ashamed of so much borrowing they started using a different name, they started calling projects BOLT projects. These were off books building projects. However borrowing by any other name is still borrowing and they have to be re-paid. We Bajans, WHITE Bajans, INDIAN Bajans, ORIENTAL Bajans all have the country in the situation we find our selves in today. So don’t put all the blame on the Govt. It is we. We have a lot of Albatrosses around our necks. The Judicial building in town, the $700million prision, the Coast Guard Station in the Harbour and so on are only a few examples of misplaced priorities and borrowing on a Govt. level. We as individuals have our own Albatrosses compounding what the public sector did.

    So borrowing got us here but the Barbados Private sector in their recommendations to Govt. wants the Govt. to do all it can to remove the downgrades, restore the credit rating ” as quickly as possible so that we can continue to borrow”!!! What kind of jackasses these private sector people could be? Is this the best that the Barbados private sector can come up with?

    Reply
  16. angela cox April 27, 2017 at 6:16 pm

    in the event a departure fee was increased the industry can incentivize by use of newer methods which can be beneficial to bringing tourist to our shores, the local taxpayer cannot be the sole burden bearer of helping govt pay its debt, while the tourism industry reap most of the benefits, yes tourism is our main economic basket but the the industry must also be aware that with duty comes responsible , and it is not good enough to throw hands in the air and become chicken little when changes are applied as my mother would say when life throws you lemons you make lemonade

    Reply
  17. Kammie Holder April 27, 2017 at 6:23 pm

    Scrap the Departure tax and impose an Arrival Tax that must be paid in either Euros, US$, £ or CDN. Airlines would be required to remit tax within 24 hours of its passenger arrival failing which 10% interest is added daily.

    Reply
  18. sticks and stones April 27, 2017 at 6:30 pm

    In the event a departure fee was increased the tourisn industry can incentivize newer ways and models of attracting tourist to our shores. The local taxpayer cannot be the sole burden bearer of helping govt tackle debt.
    Yes tourism is our main economic basket but the industry must also be aware that with duty comes resopnsible and it is not good enough to throw hands in the air and cry chicken little when changes are called for.
    For those of us in successful business we know all too well that when life throws us lemons we make lemonade and that is hiw we succeed

    Reply

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